Green Investment Bank may invest in Lightsource India

According to reports, in a sign of growing overseas investor interest in the Indian clean energy space, UK Green Investment Bank Plc. (GIB) plans to become an anchor investor in the Indian operations of UK-based Lightsource Renewable Energy.

This comes in the backdrop of a Macquarie-led consortium agreed to acquire GIB from the UK government for £2.3 billion last week. Lightsource Renewable Energy is among the largest global solar power project developers and announced its plans to develop 1,000 megawatt (MW) capacity in India.

“The talks are on. Lightsource has a proven business model,” said a person aware of the development, requesting anonymity.

There has been a growing interest in India’s clean energy space from global development finance agencies, sovereign wealth funds and pension funds. Established in 2012, GIB invests through five funds, including a dedicated £200 million (Rs1,650 crore) fund for India and African nations.

“Macquarie is committed to the Green Investment Bank’s newly established target of £3 billion of new investment in green energy projects over the next three years, either directly or by arranging capital from other investors,” Macquarie said in a 20 April statement.

This also comes at a time of growing collaboration between India and the UK, with Greg Clark, the UK’s secretary of state for business, energy and industrial strategy visiting India earlier this month. CDC Group Plc., the UK government’s development finance institution, is planning to set up its own renewable energy platform focussed on east India and neighbouring countries such as Bangladesh, Nepal and Myanmar, Mint reported.

The Indian solar power space has become intensely competitive with electricity tariffs set to fall below those of coal-fuelled power stations. This is based on an expected cost of below Rs3 per unit for solar power from projects at Bhadla in Rajasthan.

Analysts believe the space will become more competitive.

“Coming in the wake of intensely competitive bidding in Rewa and Kadappa tenders, the signs are that competition for new projects is getting fiercer, particularly as the supply of new projects has slowed down in the last 12 months,” consulting firm Bridge to India wrote in a 24 April note.

Spokespersons for GIB and Lightsource declined to comment. A Macquarie spokesperson also declined to comment.

India, the world’s third-largest energy consumer after the US and China, plans to set up 175GW of renewable energy capacity by 2022 as part of its global climate change commitments. Of this, 100GW is to come from solar.

Lighthouse Renewable had recently hired Rupesh Agarwal, who had earlier worked at consulting firms EY and BDO, as managing director for the Indian operations.

“In the last five years, Lightsource has deployed over 2 billion pounds to develop and operate ~ 1300MW of solar PV plants in the United Kingdom,” Lightsource Renewable Energy said in a 12 November 2016 statement.

Some of the overseas investors interested in India’s solar power sector include China’s largest solar equipment maker GCL-Poly Energy Holdings Ltd, Japan’s Mitsui Group, France’s Total SA, State General Reserve Fund of Oman, and Investment Corp. of Dubai.